Of course not all domains go for such crazy prices. But taking away deals of such humongous size, there are tens of thousands of domains that are being bought and sold every single day for prices that create a lucratively profitable industry.

And this is where you can find your opportunity – profiting from flipping domains.

Here’s a quick guide on how you can start buying and selling domain names for profit.

A. Buying Domains

Let’s find out how to buy domains, what to do and what not to do.

Building a Worthy Portfolio

In the domain names market, it is not uncommon for resellers or traders to buy hundreds of domain names in one go. The logic is that it is easier to find that pot of gold.

But that would require significant investment.

For beginners, I would suggest starting out with just a few good domains and slowly building your portfolio.

Being conscious of the fact that it takes times (sometimes years) to build an impressive domain portfolio. The best strategy is to look out for those potential big hitters.

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But you could also hedge your bet by progressively buying up more and more domains.

Perhaps the safe bet is to acquire domain names that seem to have already gained some traction, and keep your fingers crossed that the value could appreciate even more.

So, What Kind of Domains Should I Be Looking for?

Timely Names
This works best when you can equate a time-frame to a specific event during that time. An example here could be 2014WorldCup.com.

Business Names
Here the focus is to get the business names generic. If you can land your hand on names such as doctor or dentist, then it will be great. You can give your investment a further boost if you are able to get both generic business names and geographic names.

Geographical Names
These refer to names of countries or cities. Again especially new and emerging places can potentially land you a nice profit on your investment. Your potential targets could be some that developers may wish to build some community based portals, or design brand new services to cater to those particular communities.

Generic Names
These refer to simply a service or product. If you move fast enough for new and emerging product, then the upside can be interesting. But trade with caution, if you do want to inadvertently get caught with trademark or copyright issues. The possible result here is that you could get your newly acquired domain forfeited.

Where to Buy Good Domains for Cheap?

There are a lot of places and ways to buy domains – direct buys, auctions, expired domains, registering new domains, etc.

Some sites, such as GoDaddy.com, offer auctions where you can bid on domains.

Here are some of the options you have.

1. Buy Domains from Registrars

When it comes to buying domain names, you can use any domain registrar.

If you’re trying to register domains that are freely available, here are a few of the top domain registrars you could use:

Get them Cheaper
Typically, a domain will cost you anywhere from $7 to $14.99 or so. But you can almost always get them for way cheaper.

Be sure to always look for coupons and promo codes before buying any domain. Most of these companies offer them from time to time.

Godaddy for example, is famous for their 99 cents domain coupons. Use coupon sites like RetailMeNot.com to easily find these coupons.

2. Buy Domains at Online Auctions

If you’re serious about domain flipping, one of the best strategies is to buy expired or deleted domain names.

These are domains that their owners no longer want, so they are sold by the domain registrars in an auction style setting.

And a lot of times, you can find fantastic domain names on these auctions.

3 Months ago I bought one for $25. And although I had no intention of selling it, I got an offer from someone asking to buy it for $200. Since I didn’t want to sell it, I just countered their offer with a price tag of $3000. To my surprise, they re-countered my offer with $2500. Needless to say I sold it to them and profited $2475.

Of course, it’s not always as easy. I just got lucky with that name, and had somebody who really wanted it. That said, if you do it right, you can make very good money as a domain flipper.

Of course, you could also try Sedo, but I wouldn’t since most people who are selling there are already aware of its value, and so it would be hard for you to get a domain cheap enough that you can turn around and sell for a profit.

Out of the 4 mentioned above, GoDaddy’s auction is the best and cheapest one (from my experience).

On other sites, it seems like people bid blindly left and right and raise the price up so quickly for even names that are not really worth that much.

3. Buy Domains Directly from Owners

What if you have your eye on a name that is already registered but it’s not for sale on auction sites?

Well, you can always contact the owner directly and make an offer. Sometimes they may bite, other times they may not. But you’ll never know until you ask.

The plus side of this is that many webmasters don’t realize the true value of their domains, so they are willing to part with it for a decent amount of money.

Tool for Finding/Buying Good Auctioned Domains

Checking out these auctions one by one can be really time-consuming, not to mention, because you may not be able to see every available domain, you may lose a lot of great opportunities.

Which is why I recommend you use tools to help you sort through the hundreds of thousands of domains up for grab at these auctions.

ExpiredDomains.net (Free)
This is a free tool/website that lets you sort through the domains by different metrics (age, traffic, Page Rank, etc). It aggregates data from a bunch of different places including the auction sites I mentioned above.

RegisterCompass (Paid)
If you don’t mind spending some money (not recommended for beginners), you can use RegisterCompass. This is an advanced online domain search tool that enables you to search in expiring, expired & auction domains. It lest you filter your list on metrics such as Google PageRank, AlexaRank, Traffic, and many more.

B. Selling Domains

Ok, so now you’ve bought a few domains and are ready to sell them.

How you do it?

Where do you sell your domains?

How do you even get paid?

We’re gonna cover all of that.

But first, let’s start with a few tips:

Set Your Price
If there is no pressing need to get rid of your domain names, the desired approach is to simply set a specific price on the respective domain names. This is the modus operandi for most domain sellers.

Auction
If you seriously believe that there is a lot of interest in a domain you own, put it up for auction. This is the best possible approach to fetch the highest possible price when there is prevailing interest.

Make an Offer
If the domain name under your possession is pretty niche in nature, chances are it is not going to create mass interest as in the previous case. In such instances, you may have to make an offer as there may not be useful guidelines to determine the exit value of your domain name.

Best Places to Sell Your Domain Names

As with buying domains, there are also tons of places where you can sell your domains.

But to get the most money for your domains, you have to sell it in the right market.

Risks Involved with Domain Flipping

As in any business transaction, there will always be inherent risk for potential investors.

The most common risks associated to domain flipping are legality, subjectivity and liquidity.

But there could be also other areas you may want to pay attention to. For example, misleading appraisals or misinterpreted payment terms.

And as with any other form of investment, there is a chance you’re going to lose. Not every domain you buy is going to sell for more. So be sure to do your research before buying any domain in hopes of selling it for more.

Liquidity
Both stocks and bonds are traded on fairly liquid markets and there are always brokers you can count on to facilitate your transactions.

But this is not the case with domain names trading.

Sometimes it can take a long time (often months but could stretch to years), between the time when you you first put up a domain for sale and the emergence of a serious taker.

Stealing is illegal, and you cannot make a company buy back a domain name that rightfully belongs to them.

For example, you can’t buy CompanyX.com and make that company pays for it later. The reason is that Company X is already a trademark name.

So, stay off these issues unless you are ready for some legal wrangling. In the same way, you can’t by someone else name.

Subjectivity
Unlike stocks and bonds, where transactions are well regulated and the respective values conform to certain rules and regulations, domain names evaluation can be more subjective and difficult.

You may argue that those domain appraising companies are there to help establish prices. But there is no guarantee that unscrupulous businesses may not come out with ridiculous valuations in order to drive the market up north.

Bottom Line

As in the case of normal business, buying and selling domains for profit has its own advantages and disadvantages.

Investors of domain names are always exposed to certain business risks.

Always do your math to balance both returns and risks.

At the end of the day, buying and selling domains can be a profitable business if you can play your cards right.

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